Effect of school-based income generating activities on the financial performance of public secondary schools in Kenya

Abstract

This study was conducted to determin e the value added by Income-Genera ting Activities (IGAs) on the financial performance of public secondary schools, in terms of asse ts, liability portfolio, and net worth. Secondary school managers have the gigantic task of balancing meager resources between subsistence and development needs as well as good performance in national examinations. However, macro-economic shoc ks such as inflation, fuel shortage, and crop failure, among others, often militate against the success of public schools. School-based IGAs enable public schools to cope with external economic shocks, w ithout necessarily passing down budgetary adjustments to parents. However, the country lacks a clear policy guideline to facilitate th e initiation, management, accounting, reviewing, and financial reporting of IGA projects. Besi des, there is no documente d information regarding the value added by IGA initiatives to the financial performa nce of public secondary schools. The study found that IGA and non-IGA schools were significantly diffe rent in terms of category, student population, age, annual income, and number of paid workers. Schools having IGAs were 1.9 tim es more likely to own as many assets as schools not having IGAs. Besides, IGA sch ools were about 2.2 times less likely to have their liability in excess of the median threshold. Regarding net worth, the study found that sc hools having IGAs were about 2. 1 times more likely to be operating above the median threshold; suggesting that schools having IGAs we re wealthier than non-IGA schools. Based on the findings, this study concludes that IGA project s were beneficial to schools by improving the ability of schools to accumulate assets and manage their liabilities. The study recommends the need to: formulate an appropriate policy framework to guide and standardize I GA activities; initiate suitable training programs for school IGA managers; as well as engage business development managers to advice schools on IGA matters.